Success Breeds Failure

Lets do some painting, say a conceptual landscape dealing with the Philippine economy.

This aforesaid economy is growing nicely on a canvas of good governance and honorable intentions, pasted in a fragile way atop an unattractive mass of dark history featuring power-mongering, shady dealings and favor trading.

The manufacturing base of the Philippines is thin so there is not much of a foundation. Poverty is crushing so the load on that weak foundation is heavy. But the inflow of money from OFW’s is enriching the nation, and some important commercial pillars are being established: call centers, casinos, tourism, agricultural exports and real estate. The expanding pot of money being generated seems to circulate its pesos well. Many new projects are opening up, jobs are being created, tax revenues are being cranked up on stronger collection disciplines, and the anti-corruption drive is putting a stop to the siphoning of billions of taxpayer pesos into private pockets.

Cultural traditions are still a drag, for sure. Self-dealing instead of customer-service. Murderous inclinations. Officious arrogance of power rather than good competitive practices, like innovation and efficiency and quality control. Poor application of computer technology and even iron machines. So the construction of a bigger economy is a tad sloppy and slap-dash and clunky.

But what if we recognize that what we have now is not what we will have in five years. And certainly not what we will have in 10 years.

Let’s paint our picture this way using our unique JoeAm foresighted paint applicator, otherwise known as a long long long long long-handled brush:

The Philippines is isolated from global economic swings, up and down, by the stability of its OFW inflows, and we figure that will not change until the Philippine economy is so large that people start coming home. Maybe that begins 20 years from now. Until then, the only question is, “how fast is up?”

The Philippines is also being sucked economically upward by being a low-cost, reasonable-risk, virgin place to invest in a globally competitive world. This is like the US in the 1950’s. Balls to the wall economic expansion building a larger middle class. A huge middle class. An educated middle class. THAT, my Society friends, is called a real economic foundation.

New business enterprises will come into being. It’s a given, the laws of profit-making being much like gravity, drawing entrepreneurs directly to the opportunity to make big money. The 40% ownership rule will be negated by innovative legal processes that wrap foreign money in Philippine ownership, but keep control and profits in foreign hands. I’m a foreigner but my son can own anything. That kind of creativity. Or trusts, those work, too.

Do you want to know what will happen to the old paper-based, rude, inefficient Filipino businesses? Those whose owners fail to use machines or technology because people cost so little? Those whose owners think customers exist to serve THEM?

Well, here’s what will happen. Wages will go up. New businesses with computers and smiles will arrive in the local market. And customers will flee to better service and better deals.

The old model will be a failed model.

Gaisano Malls will modernize and get polite or go under, a sloppy, rundown pit of sloth in a vibrant, competitive, richer Philippines.

Success breeds failure.

Well, for sure, this is not guaranteed. It takes work. And stuff happens, you know? But, realistically, what can stop Philippine success?

Returning the Presidency and nation to the old ways of favor, trickery and self-dealing.

War with China.

Massive natural disasters, one after another.

Massive global economic collapse forcing the return of OFWs.

Let’s do a thumbnail sketch of the likelihood of each of these events occuring. This will help us get a rough sense of how confident we can be that the Philippines is on the cusp of long-term success, and emergence as a respected global economic player:

Well, we the people control the Presidency, do we not? The likelihood that the Presidency will return to the corrupt is perhaps 40% now. We ought to work concertedly to make sure there is continuity with the Aquino good-governance agenda in 2016. Reduce the chance of going back, and backward, to 5%. That is, work to assure that the likelihood of continuing good clean growth is ratcheted up to 95%.

China will dictate what happens in the West Philippine Sea. Worst case, a fighting war flares up. Unfortunate case, the Philippines cedes to China the sea area she claims, and moves on. Best case, a mutually advantageous agreement for development and occupancy of contested areas is struck. The wise approach is not to worry about it. Avoid the worst case; make it a 5% likelihood. Don’t sacrifice Philippine economic growth over this.

Massive natural disasters can’t be prevented, but their impacts can be lessened by good zoning and construction codes, strong warning systems, and quick, effective disaster response. Put a worst case, destructive series of events at about 5% probability.

A massive global economic collapse throws us all into deep doodoo. Cycles, up and down? Yes, we must ride them out. But the likelihood of a massive collapse? That’s small. Say 5% probability.

Given that picture, I’d say we can anticipate that enduring growth will create a lot of failures in the Philippines over the next 20 years. The failures will be businesses and government practices, and their failed sponsors, that go the way of the dodo bird because they simply can’t adapt to an efficient, competitive, service based model.

That portrait looks great from here.

And it fits, for the Philippines is a very photogenic place, as we will discover in our next blog.

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Comments

Although Binay and UNA are front-runners in the 2016 presidential elections, I am not that pessimistic that the gains made in Pnoy’s term will be put to waste by them. That risk of backsliding will always be there-, but you have these factors which were not present a decade ago:

a. A vibrant chattering class aided by the internet and social media. So corruption and wrongdoing are easily communicated to the populace.No would-be dictator could shut down the internet and wireless communications.

b. Extremists from the left (CPP-NPA) and right (church, military) have been sidelined by a grown centrist middle class who are vocal and well informed. Extremists thrive only in dire situations.

Sure, the country is still decades away from graduating from Third World status, but it’s no reason to hang your heads and get glum.

We have to keep pushing back the bad guys, the nattering nabobs of negativism.

Very interesting perspective, Andrew. I’ll have to let the Binay observation perk a little bit. I’m perplexed that he thinks dynasties are good, and that he has pushed his daughter into the senate (most likely), regardless of her total lack of qualification for such an important job. It would seem to me that this is an argument that his perspective of “good governance” has not yet matured. But I do think this election is probably instructive for him, regarding the power of the “chattering class”. A description that gives me great chuckles.

But for sure, there is no reason to get glum. Indeed, self-assurance and confidence are 80% of what is needed to progress well.

1. it’s nice to spread cheer and optimism of the future on Election Day.

2. As the headlines blare, the election is a referendum on the continuity of PNoy’s good governance. We are at the crossroads.

3. There is an anticlimactic feeling to this day. It may just be me. Or perhaps the feeling is pre-climactic. Not the calm before the storm, but of some gentle swirling of air, of some small ripples on the water’s surface.

4. The toll of poll-related violence is 47 lives. In response to allegations of a planned assassination of her rival, a mayoress is quoted as saying, “Maybe if she were ‘winnable,’ but she’s not”.

4.1. “The thought is father to the deed. “ Or: “The wish is father of the deed”.

5. I am coming to the view that all our problems are problems of consciousness. (Which is why Cha’s non-profit ATD organization seeks to cure poverty by widening the experiential reality of the poor.) Not necessarily ignorance but small-mindedness. Ignorance is doing things because we do not know. Small-mindedness is doing things out of cognitive dissonance: we know but do not wish to know. There is this element of wilfulness.

5.1 Where else but here can you see a mayoress coldly evaluating the possibility of taking a life for a mayorship? Where else can you see an idolatrous priest engage in smuggling ivory wrapped in “stinky underwear and ketchup”? Where else can you see a poor man buy just one or two sticks of cigarettes?

5.2 The small-mindedness of the Filipino politician, clergy and poor is endemic.

5.3 Fortunately there is this on-going flowering of counter-consciousness or of a higher consciousness. If success breeds failure, may the vision [of higher consciousness] breed reality.

One indeed wavers between dismay (murders) and optimism (the chattering class referred to by Andrew, and its counterpart, the middle class, that I refer to as the hope of a more reasoned and conscious future). With economic growth, we will see a bigger weight assigned to reason and responsibility over favor, because that many people can’t make it by wheeling and dealing in the favor arena. The laws are being screwed up tighter and a lot of people want a better Philippines.

That said, my neighbor is the Barangay Captain, and the vote buying (for governorship) was blatant right in his front yard. My wife’s brother used his money to buy new basketball shorts. So somehow, the do-gooding has to have stronger enforcement mechanisms to squeeze out those who know what they are doing, know it is wrong, but do it because it benefits them.

I like your definition of small-minded. It does not rationalize that ignorance is okay. Indeed, most people know fully well what is going on, or know they could participate in an upright way, but choose not to. I think lazy and small-minded are brothers.

O Captain! My Captain! our fearful trip is just begun;
The ship may weather every wreck, the prize we seek is gone;
The port is far, the bells not here, the people all accounting,
While follow eyes the flashy bills, the wallet fat and brimming:
But O heart! heart! heart!
O the shiny coins of gold,
Where in the yard my brother jumps
In new shorts proud and bold.

My wife was telling me that in her town messengers used to come to her house with color coded envelopes. Those envelopes had the vote buying money inside. She used to get it from opponents also (different colors) around 200php each. Some of that vote buying money was stolen from barangay captains and about 2 months after the election it materialized in the form of a new TV set or home improvement projects for the captains family.

1. The news about Binay ranking high in the elections made me think about migrating to another country. I’d probably be an old man/dead before this country changes.
2. As for China, I really don’t think they would “share” the sea. I think I am becoming a racist because of this issue. I am beginning to hate the chinese. Each time I see one, I feel slightly angry. Also, it does not help that a Mainland chinese guy is a meter from me in my workplace. My friends are wondering why I don’t talk to him. I know its wrong but I can’t help it. China is STEALING our resources right in front of us.

For the life of me, I can’t imagine why anyone would elect someone whose employment record is essentially personal assistant to her father. It goes into the same bucket as Imelda Marcos. Astounding. I wonder how many laws she will write?

I’m also with you on building feelings of animosity toward the Chinese. They operate with complete disregard for anyone else, and the irrationality of their view gets returned, an outcome of a high measure frustration of dealing with their insults and thuggery and one-way perspective. I detect a measure of Chinese racism toward Filipinos, the condescension is so thick, and the powers in charge of China fuel animosity among their emotional citizenry to make political hay. It’s not good.

Was it the Binay’s who said they will turn the Philippines into a Makati?

Very tempting…. except that they were not really the ones who built Makati — it was the Ayalas (Zobel de Ayalas). Makati was nothing after the war. Now look what it has become…while the older city called Manila is dismantling her heritage — the ones that was left untouch by the battle in 1945

How to turn the Philippines into a Makati with Binay? I dunno and I don’t want to imagine

Local government can either block or permit specific developments. It is a powerful position. If it takes giving the mayor a condo to get the permissions, that’s pretty cheap for the developer. I’m not exactly sure how a President can do that. Maybe in the routing of national budget money to local government officials who agree to approve projects that give the Mayor’s daughter a condo for each high rise approved. I think by 2016 there will be a condo bubble, given how aggressive the construction is right now.

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